By Oliver Griffin
SAO PAULO (Reuters) -Growth of Brazil’s corn ethanol sector has become key to meeting the country’s growing demand for the renewable fuel under a new government mandate to use more ethanol in gasoline, even as sugarcane-based ethanol output has stagnated.
Brazil is the world’s largest producer of ethanol from sugarcane, but output has flattened since the turn of the decade, while corn ethanol production has more than tripled, according to data from sugar and ethanol industry group UNICA.
In the 2024/25 cycle, corn ethanol output in Brazil’s center-south region rose nearly 31% from the year before to 8.19 billion liters, according to an UNICA report.
On Wednesday, Brazil’s government approved a measure hiking the mandatory blend of ethanol in gasoline to 30%, from 27% previously, which will require well over 1 billion more liters of ethanol per year.
“Thanks to corn ethanol, we are increasing the blend to 30%, right? If it weren’t for this increase in production, we wouldn’t be able to implement this policy,” said Guilherme Nolasco, president of the corn ethanol industry group UNEM.
Brazil’s government initially put off raising the ethanol blend in gasoline this year, which some attributed to concerns it could push up prices. By the time officials confirmed the move this week, they were touting it as a way to bring down prices at the pump.
Amance Boutin, business development manager at consultancy Argus, said the decision to implement the new biofuel mandate from August is a vote of confidence in the capacity of the corn ethanol sector to keep ramping up production.
At the same time, cane growers in Brazil, which is also the world’s top exporter for sugar, are expected to maintain their preference for producing the foodstuff over fuel, said Gabriel Barra, director and head of Latin American equity research for oil and gas, petrochemicals and agribusiness at Citibank.
“Sugar will continue to take a large part of this mix from sugarcane processing,” Barra said. “Ethanol will most likely continue to lose this competition.”
In March, Citi forecast corn ethanol production in Brazil would hit 16 billion liters by 2032, a sentiment echoed by UNEM’s Nolasco.
“We have the capacity to double current production by 2032,” Nolasco said.
According to UNEM, corn ethanol represents 23% of current ethanol production in Brazil and it expects it to grow to account for 40% of the fuel’s output over the next decade.
At an industry event in Sao Paulo this month, UNICA Chief Executive Evandro Gussi said Brazil is not concerned about whether ethanol comes from sugar, corn or another source, as long as it has low carbon emissions and does not deprive the country of needed food.
